What the Workplace Discrimination Ruling May Mean for You

Most employers have heard of the classes that are protected by Title VII of the Civil Rights Act – race, color, national origin, sex, and religion. But many employers aren’t aware that there are other federal and state laws that create protected classes, and that the Equal Employment Opportunity Commission (EEOC) and courts around the nation have the power to expand the definitions of these classes.

For instance, in a landmark ruling last month, the Seventh Circuit Court of Appeals found that workplace discrimination based on sexual orientation is prohibited under the Civil Rights Act because it falls under the definition of “sex.”

What the workplace discrimination ruling may mean for you

So, what does this mean for employers?

  • This ruling only affects Indiana, Illinois, and Wisconsin, but it makes it more likely that courts across the country will start interpreting sex to include sexual orientation. It also makes it more likely that the U.S. Supreme Court will hear a case on the topic and establish nationwide law.
  • Illinois and Wisconsin already have state laws that create employment protections based on sexual orientation, so there are no new action items for employers in those states, unless of course they weren’t aware of those state laws.
  • Employers in Indiana should ensure that their policies and practices do not allow for discrimination based on sexual orientation.

Interestingly, the EEOC has interpreted sex to include sexual orientation and gender identity for several years, hence our longstanding advice that employers treat those as protected classes.

Questions?

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Email: amatak@payrollexperts.com
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The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 The HR Support Center, Inc. All rights reserved.

HR Snapshot – Requiring Employees to Come in Early

Courtesy of HR Snapshot!

Question: If we require employees to come in 10 minutes early to prepare for the start of their shift, do we have to pay them for this extra time?

Answer from Kara, JD, SPHR:

 

Yes. Under the Fair Labor Standards Act (and likely state law as well), you must pay employees for all hours worked. This includes the time they are required to be on your premises, even if they haven’t begun their “regular” duties. Preparing for work—if it must be done at work—will be considered part of the employee’s continuous workday.

You are certainly welcome to have an attendance and tardiness policy that requires employees to be at their assigned location and ready to work exactly when their shift begins, and to discipline them if they are not ready. But if you require employees to arrive earlier to ensure this happens, you’ve effectively extended their shift by that amount of time and will need to compensate them for it.

 

Kara practiced employment and bankruptcy law for five years before joining us, and was a Human Resources Generalist at an architecture and engineering firm for several years prior to that. As an attorney she worked on many wage and hour and discrimination claims in both state and federal court. She holds a Bachelor of Arts degree from Oregon State University and earned her law degree from Lewis and Clark Law School.

 

Questions?

Payroll Experts 
7500 North Dobson Road
Scottsdale, AZ 85256
Phone: 877.536.1907
Email: amatak@payrollexperts.com
Visit us online

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 The HR Support Center, Inc. All rights reserved.

HR Snapshot – Tracking FMLA Leave

Courtesy of HR Snapshot!

Question: How do I track FMLA leave?

Answer from Sarah, PHR, SHRM-CP:

After determining that a leave is covered by FMLA, you should begin tracking time against the 12-week entitlement. You’ll track this time in whole-week increments if the need for leave is continuous. Each week missed will be counted as 1/12th of their total entitlement.

If the employee needs intermittent leave, or reduced hours, you’ll need to determine how many hours they are entitled to in total and record the time they miss on an hour-by-hour basis. To do so, you would take the number of hours that an employee regularly works in a week and multiply it by 12. For instance, if an employee is regularly scheduled to work 40 hours per week, their 12-week FMLA entitlement would be 480 hours (40 x 12 = 480). If they worked 30 hours per week, their 12-week FMLA entitlement would be 360 hours (30 x 12 = 360). If their hours fluctuate, you should go back twelve months from the start of their leave and calculate their weekly average, then multiply that number by 12.

If an employee is missing time on an intermittent basis that has not been established ahead of time (e.g. they occasionally suffer from migraines versus having a standing appointment for chemotherapy each Tuesday), make sure they know that they need to notify you when they are taking time off for an FMLA-qualifying reason. This is necessary so that you can track that time (a benefit to you) and treat it as protected (a benefit to the employee).

If an employee says that they need to miss more time than is indicated on their current doctor’s certification, you should request updated paperwork to cover additional time missed. Please note: even if you trust this employee, you might not trust the next, and you want to ensure you’re applying the same standards across the board to avoid claims of discrimination—particularly when a disability of some kind is already in play.

Sarah has extensive Human Resources experience in the legal, software, security and property preservation industries. She has a Business Communications degree from Villa Julie College (now Stevenson University) and a master’s certificate in Human Resources Management and a Strategic Organizational Leadership certification from Villa Nova University. Sarah is also a member of the National Society of Human Resources Management and has managed the HR function for small startup companies to mid-sized/large organizations.

Questions?

Payroll Experts
7500 North Dobson Road
Scottsdale, AZ 85256

Phone: 877.536.1907
Email: amatak@payrollexperts.com
Visit us online

How to Reduce Absenteeism

Taking time away from work is good for the health and morale of employees. When they can rest during an illness, recuperate after an injury, or tend to affairs in their personal lives, they’re better able to focus at work and engage in the tasks at hand. Too many absences, however, may be a sign of absenteeism which can be costly for employers and frustrating for other employees who have to pick up the slack.

Absenteeism occurs when employees skip work for no good reason. You may not be able to prevent the illnesses, injuries, or family emergencies that keep employees from coming to work, but you can and should do something about absenteeism. Fortunately, there are a few steps you can take.

How to Reduce Absenteeism

The first step to reduce absenteeism is to make sure you have a clear attendance policy. This policy should state your expectations for attendance and the procedures for time-off requests—as well as the possible consequences for employees who violate the policy. Having and following a clearly written attendance policy makes it easier to hold people accountable to it.

The second step is to make sure you’re following all applicable leave laws. If your company is subject to the Family and Medical Leave Act, for example, you may be required to provide job-protected leave to an employee who needs a leave of absence to seek care for themselves or a family member. A number of states and municipalizes have sick leave laws that may guarantee employees a certain number of sick days per year. Make sure you give employees the option to take all the time off to which they’re legally entitled. You can certainly give employees more time off than what the law requires, and allowing for more expected absences may help reduce the number of unexpected ones. Just make sure you offer this leave in a non-discriminatory manner, consistent with your policy.

The third step is to use discipline for policy violations. If an employee has been missing work without a legitimate reason and in violation of your policy, you should discipline them. Depending on the severity of the absenteeism, you might start with an oral or written warning and then move up from there. Reoccurring absenteeism could be grounds for termination if you’ve given the employee fair warning and they haven’t improved.

The fourth step to reducing absenteeism is to create a workplace where people want to be. If absenteeism is widespread or higher than you find acceptable, assess the management styles and employee interactions in your workplace. Are people generally happy? Do they get along? Are there any issues of concern, such as bullying? Do employees have opportunities to get to know one another and form collaborative and supportive relationships? Do they feel supported and valued by management? You can stop attendance problems before they start by building a workplace where people are inspired to work hard, do well, and celebrate success.

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 The HR Support Center, Inc. All rights reserved.

FLSA Amended to Allow Tip Pooling if No Tip Credit is Taken

The rules around tip pooling have been mired in litigation since 2011, when regulations came into effect that forbid tip pooling between employees who customarily receive tips and those who do not. The recently passed federal budget bill has created clarity by amending the Fair Labor Standards Act (FLSA) and eliminating that rule for employers who do not take a tip credit. Since the rule has been eliminated entirely, court decisions interpreting it—such as Oregon Restaurant and Lodging Association, et al v. the U.S. Department of Labor—are irrelevant.

FLSA Amended to Allow Tip Pooling if No Tip Credit is Taken

The amended portion of the FLSA, while allowing for tip pooling between front and back of house employees if no tip credit is taken, clearly states that tips cannot be shared with managers or supervisors. To determine if someone is a manager or supervisor for the purpose of the tip pooling statute, employers should apply the White Collar Executive duties test below. An employee is only disallowed from sharing in tips if all of the following are true:

  1. Their primary duty is the management of an enterprise in which the person is employed or a customarily recognized department or subdivision; and
  2. They customarily and regularly direct the work of two or more full-time employees (or the equivalent, e.g., four 20-hour per week employees); and
  3. They have the authority to hire, fire, or promote other employees or effectively recommend similar actions.

Given the specificity of the test, a fair number of workers who operate in a supervisory capacity on an occasional basis, or while performing their own customer service tasks, will likely still be eligible to share in tips.

Employers who do take a tip credit are still prohibited from enforcing any tip pooling system that shares tips with employees who do not customarily receive tips.

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 The HR Support Center, Inc. All rights reserved.

Counting Employees Vital to ACA Compliance

Employers are reminded that it is important to know how many full-time employees they have in order to ensure compliance with the employer shared responsibility (“pay or play”) provisions of the Affordable Care Act, which apply to applicable large employers (ALEs).

Counting Employees Vital to ACA Compliance

Determining ALE Status
Whether an employer is considered an ALE for a particular calendar year depends on the size of its workforce during the preceding calendar year. For example, employers will use information about the size of their workforce during 2017 to determine if their company is an ALE for 2018. Employers with an average of at least 50 full-time employees in the preceding calendar year—including full-time equivalent employees—are generally deemed ALEs for the current calendar year.

Identifying Full-Time Employees
In general, for purposes of pay or play:

  • full-time employee is, for a calendar month, an employee who is employed on average at least 30 hours of service per week. However, 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.
  • full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.

For additional rules on determining who is a full-time employee, including what counts as an hour of service, click here.

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

Best Practices for Preventing Workplace Harassment

A report from the U.S. Equal Employment Opportunity Commission (EEOC) highlights best practices for employers to prevent and respond to workplace harassment. According to the EEOC report, employers should:

Best Practices for Preventing Workplace Harassment

  • Foster an organizational culture in which harassment is not tolerated;
  • Adopt and maintain a comprehensive anti-harassment policy (which prohibits harassment based on any protected characteristic, and which includes social media considerations) and establish procedures consistent with the best practices outlined in the report;
  • Ensure that any such anti-harassment policy–especially details about how to complain of harassment and how to report observed harassment–is frequently communicated to employees in a variety of forms and methods;
  • Ensure that where harassment is found to have occurred, discipline is prompt and proportionate to the severity of the infraction. Discipline should be consistent and not give or create the appearance of undue favor to any particular employee; and
  • Dedicate sufficient resources to training middle-management and first-line supervisors on how to respond effectively to harassment that they observe, that is reported to them, or of which they have knowledge or information–even before such harassment reaches a legally-actionable level.

Click here to read the EEOC report in its entirety.

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

DOL Replaces Guidance on Employee Classification

The U.S. Department of Labor (DOL) has withdrawn its 2014 guidance regarding the meaning and scope of the term “employment relationship” under the federal Fair Labor Standards Act (FLSA) and replaced it with its guidance from 2008. As a result of this change, the DOL no longer advises that “most workers are employees.”

DOL Replaces Guidance on Employee Classification

Withdrawn 2014 Guidance
In 2014, the DOL issued guidance on how to determine whether an employment or independent contractor relationship exists for purposes of the federal FLSA. The guidance stated, among other things, “Applying the FLSA’s definition [of “employ”], workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees, and most workers are employees.” Effective immediately, this guidance has been withdrawn.

2008 Guidance Once Again Effective
The 2014 guidance has been replaced by guidance from 2008. The 2008 guidance does not contain the statement that “most workers are employees.” However, this guidance does include the same “economic realities” test present in the 2014 guidance, under which determination of employee status is made by considering the following factors:

  • Whether the work performed is an integral part of the employer’s business.
  • Whether the worker’s managerial skill affects the worker’s opportunities for profit or loss.
  • The worker’s relative investment compared to the employer’s investment.
  • Whether work performed requires special business skills, judgment, and initiative.
  • Whether the worker-employer relationship is permanent or indefinite.
  • The nature and degree of the employer’s control of the work.

For additional information on employers’ responsibilities under the FLSA, contact us today to learn how Payroll Experts can help!

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

New Form W-4 and Online Withholding Calculator Released

The Internal Revenue Service (IRS) has released new versions of Form W-4 and its online withholding calculator to help taxpayers check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act in December 2017. The IRS urges taxpayers to use these tools to make sure they have the right amount of tax taken out of their paychecks.

Online Withholding Calculators Released

Among other things, the Tax Cuts and Jobs Act increased the standard deduction, removed personal exemptions, increased the child tax credit, limited or discontinued certain deductions, and changed the tax rates and brackets. If changes to withholding should be made as a result of these changes, the IRS withholding calculator gives employees the information they need to fill out a new Form W-4. Employees must submit the completed W-4 to their employers.

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

Top 5 Necessary New Hire Forms

An employee’s first day on the job can be very stressful for both the employee and employer. While trying to set up the new hire with his or her parking pass, email account, and other necessities, employers should also remember that completing the following forms is just as important.

Top 5 New Hire Forms

  1. Form I-9: Under federal law, employers are required to verify the identity and employment authorization of each person they hire by completing and retaining Form I-9, Employment Eligibility Verification. Newly hired employees must complete and sign Section 1 of Form I-9 no later than the first day of employmentClick here to download Form I-9.
  2. Federal Form W-4: An employee must complete federal Form W-4 for the employer to withhold the correct federal income tax from the employee’s pay. Click here to download federal Form W-4.
  3. State Form W-4: In states with a state income tax, an employee must complete a state Form W-4 (or its equivalent) in order for the employer to withhold the correct state income tax from the employee’s pay. To obtain a state Form W-4, contact your state’s taxation department.
  4. Basic Employment Information Sheet: Employers should keep certain basic information about each of their employees on file, including their address, phone number, and emergency contact. Click here to download a Basic Employment Information Sheet.
  5. Direct Deposit Authorization Form: It is now easier than ever for an employer to directly deposit an employee’s paycheck into his or her bank account. Such deposits, however, must be specifically authorized by the employee. Click here to download a Direct Deposit Authorization Form.

 

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

3 ACA Terms Large Employers Need to Know

In general, under the employer shared responsibility (“pay or play”) provisions of the Affordable Care Act (ACA), applicable large employers—generally those with 50 or more full-time employees, including full-time equivalent employees—may be subject to a penalty if they do not offer minimum essential coverage that is affordable and provides minimum value to their full-time employees (and their dependents).

ACA Terms- Large Employer

Here are definitions to help employers understand these key terms:

Minimum Essential Coverage: Minimum essential coverage includes, among other things, coverage under an employer-based plan (including self-insured plans, retiree plans, and COBRA coverage). It does not include fixed indemnity, life insurance, dental, or vision coverage. Click here for more on what qualifies as minimum essential coverage.

Affordable Coverage: For purposes of pay or play, coverage is generally considered affordable for plan years beginning in 2018 if the employee’s required contribution for the lowest cost self-only health plan is 9.56% or less of his or her household income for the taxable year. Given that employers are unlikely to know an employee’s household income, for purposes of pay or play, they may use a number of safe harbors to determine affordability, including reliance on Form W-2 wages.

Minimum Value: An employer-sponsored plan provides minimum value if it covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan, and provides substantial coverage of inpatient hospitalization and physician services.

The content herein is provided for general information purposes only, and does not constitute legal, tax, or other advice or opinions on any matters. This information has been taken from sources which we believe to be reliable, but there is no guarantee as to its accuracy.

Copyright © 2018 HR 360, Inc. All rights reserved.

2018 Federal Tax Withholding Guidance Released

The Internal Revenue Service (IRS) has released Publication 15 (Circular E), Employer’s Tax Guide, for use in 2018. This publication:

2018 Federal Tax Withholding Guidance Released

  • Details employers’ federal tax responsibilities;
  • Explains the federal requirements for withholding, depositing, reporting, paying, and correcting employment taxes;
  • Lists the forms employers must give to their employees, those that employees must give to the employer, and those that the employer must send to the IRS and Social Security Administration; and
  • Features the tax tables to calculate the taxes to withhold from each employee.

Publication Highlights
Highlights of the 2018 publication include the following:

  • Social Security and Medicare Tax for 2018. The Social Security tax rate is 6.2% each for the employee and employer. The Social Security wage base limit is $128,400. The Medicare tax rate is 1.45% each for the employee and employer. There is no wage base limit for the Medicare tax.
  • 2018 Withholding Tables. The publication includes the 2018 Percentage Method Tables and Wage Bracket Tables for Income Tax Withholding.
  • Withholding Allowance. The 2018 amount for one withholding allowance on an annual basis is $4,150.

Click here to access the 2018 IRS Publication 15.

Reminder: Post OSHA Form 300A Starting Feb. 1

Employers subject to the record-keeping requirements of the federal Occupational Safety and Health Act are reminded to post their 2017 OSHA Form 300A, Summary of Work-Related Injuries and Illnesses, from February 1–April 30, 2018.

OSHA Form 300A lists the total number of job-related injuries and illnesses that occurred during the previous year, and must be posted even if no work-related injuries or illnesses occurred during the year. It should be displayed in a common area where notices to employees are usually posted so that employees are aware of the injuries and illnesses occurring in the workplace. In addition, a company executive must certify that he or she has examined the employer’s OSHA Form 300, Log of Work-Related Injuries and Illnesses, and that he or she reasonably believes—based on his or her knowledge of the process by which the information was recorded—that the OSHA Form 300A is correct and complete.

For more information on the OSHA Form 300A requirement, please click here.

What Employers Need to Know About ACA Reporting in 2018

Under the Affordable Care Act, applicable large employers (ALEs)—generally those with at least 50 full-time employees, including full-time equivalent employees, in the preceding calendar year—must report certain information to their full-time employees and the Internal Revenue Service (IRS) about the health care coverage they have offered (if any).

With deadlines for 2017 reporting just a few weeks away, ALEs should begin thinking about these five information reporting facts:

  1. ALEs are required to furnish a Form 1095-C to each of their full-time employees by March 2, 2018.
  2. ALEs must file Forms 1095-C, accompanied by the transmittal Form 1094-Cwith the IRS no later than February 28, 2018 (or April 2, 2018, if filing electronically).
  3. Self-insured ALEs must also report via Forms 1094-C and 1095-C.
  4. ALEs that file 250 or more Forms 1095-C must file them electronically.
  5. ALEs can find a complete list of information reporting resources at the IRS’s Information Center for Applicable Large Employers.

IRS Releases New Income Tax Withholding Tables

The Internal Revenue Service (IRS) has released IRS Notice 1036, Early Release Copies of the 2018 Percentage Method Tables for Income Tax Withholding. The notice updates the income tax withholding tables for 2018, reflecting changes made by the Tax Cuts and Jobs Act.

Employers should begin using the 2018 withholding tables as soon as possible, but not later than February 15, 2018. The new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers.

Click here to read IRS Notice 1036

 

HR Snapshot- Workers Compensation Advice

Courtesy of HR Snapshot!

Question: An employee injured themselves while on break and had to be taken to urgent care. Does this injury fall under workers’ compensation even through it occurred during a break?

Answer from Marisa, PHR:

Whenever an employee makes you aware of an injury or accident during the workday or at the workplace, your best course of action is to file a claim with your workers’ compensation carrier. Once the claim is in their system, you can work with the carrier to determine if the claim is valid. If you have concerns, you can (and should) raise them with the carrier.

Once the carrier has the claim and related information, they can analyze the issue and decide whether they want to dispute or negotiate the claim and what benefits will or will not be offered. Like you, they want to control costs, so they will be on your side as circumstances allow.

If the employee does not wish to file a claim, you should still have them complete the claim form to document the incident. You should also be sure to document that the employee declined to file for benefits.

Marisa has experience working in a wide variety of HR areas, including payroll, staffing, and on-/ off-boarding. She has worked at both national and local companies, in a wide range of businesses and industries. Marisa earned her B.S. in Business Administration and Communications from the University of Oregon. She loves watching football and basketball, volunteering and spending time with her two dogs.

Questions?

Payroll Experts
7500 North Dobson Road
Scottsdale, AZ 85256
Phone: 877.536.1907
Email: amatak@payrollexperts.com
Visit us online

EEOC Releases Guidance on Workplace Harassment Prevention

Guidance on Workplace Harassment Prevention

The U.S. Equal Employment Opportunity Commission recently issued Promising Practices for Preventing Harassment, a guidance document that contains harassment prevention recommendations for employers in four broad categories:

  • Leadership and accountability;
  • Harassment policies;
  • Harassment complaint systems; and
  • Harassment training.

For each category, the guidance lists numerous actions employers can take. Recommended actions include, for example:

  • Allocating sufficient resources for effective harassment prevention strategies;
  • Crafting an unequivocal statement that harassment based on, at a minimum, any legally protected characteristic, is prohibited; and
  • Conducting regular, interactive, and comprehensive harassment prevention training for all employees.
The document states that while the practices it discusses are not legal requirements under federal employment discrimination laws, they may enhance compliance efforts.

To read the guidance document, click here.

Small Business Health Care Tax Credit Form Released

The IRS has released Form 8941, Credit for Small Employer Health Insurance Premiums, and related instructions, for tax year 2017. Eligible small employers use this form to figure the credit for health insurance premiums under the Small Business Health Care Tax Credit.

The Small Business Health Care Tax Credit is designed to encourage small businesses and tax-exempt employers to offer health insurance coverage to their employees. Among other requirements, an employer may be eligible for the credit for tax year 2017 if: Small Business Health Care Tax Credit Form Released

  • It had fewer than 25 full-time equivalent employees for the tax year;
  • It paid at least 50% of the premium cost for single health care coverage for each employee;
  • The average annual wages of its employees for the year were less than $53,000; and
  • It paid premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace (or qualifies for an exception to this requirement).

Note: Employers in Hawaii cannot claim this credit for insurance premiums paid for health plan years beginning after 2016.

Click here to review Form 8941 and its instructions.

Federal Law Alert: DOL Adopts New Unpaid Intern Test

DOL Adopts New Unpaid Intern Test

Last Friday the Department of Labor (DOL) adopted a new test for unpaid interns. Employers should use this test—called the primary beneficiary test—when determining if a worker can be properly classified as an unpaid intern or if they need to be classified as an employee and paid minimum wage and overtime. The test adopted by the DOL has already been in use in four federal appellate courts, most recently the Ninth Circuit Court of Appeals. The DOL’s switch to the primary beneficiary test creates a nationwide standard.

Balancing v. All-or-Nothing
Previously, the DOL was using a six-question all-or-nothing test. An employer needed to be able to say “yes, the internship does that” to all six questions or else classify the worker as an employee. The new test is a balancing (or factors) test and has seven questions. No single question will disqualify the worker from being classified as an unpaid intern. Instead, the employer may look at the answers as a whole.

The New Questions
The new questions overlap significantly with the old questions. The major element missing from the new test is a focus on whether the intern is providing tangible benefit to the employer. The old test indicated that the employer should receive little to no benefit from the services of an unpaid intern, with the exception of goodwill and a qualified future applicant. The new test doesn’t ask if the employer is receiving a benefit.

In place of questions about whether the employer receives any benefits, the new test places more emphasis on the internship being academically focused. Only one of six questions in the old test asked about the training and educational aspects of the job, whereas four of seven do in the new test. Employers are free to look at factors outside of these seven, but should be careful about stretching to find new questions if these seven lead to an answer of “paid employee.”

Under the primary beneficiary test, employers should consider the following:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Questions?

Payroll Experts
7500 North Dobson Road
Scottsdale, AZ 85256
Phone: 877.536.1907
Email: amatak@payrollexperts.com
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ACA Forms 1095 Due to Employees by March 2nd

ACA Forms 1095 Due to Employees by March 2nd

Employers subject to the Affordable Care Act’s (ACA) information reporting requirements are reminded that the deadline to furnish Forms 1095-B and 1095-C are quickly approaching. The reporting deadlines in 2018 are for reporting information on the 2017 calendar year, and are as follows:

  • Applicable large employers (ALEs)—generally those with 50 or more full-time employees, including full-time equivalents—must furnish a Form 1095-C to all full-time employees by March 2, 2018.
  • Self-insuring employers that are not considered ALEs, and other parties that provide minimum essential coverage, must furnish a Form 1095-B to responsible individuals (which may be the primary insured, employee, former employee, or other related person named on the application) by March 2, 2018.